Managing
Strategy
Chapter 9
Learning Objectives
9.1 Define strategic management and explain why it’s
important.
9.2 Explain what managers do during the six steps of
the strategic management process.
9.3 Describe the three types of corporate strategies.
9.4 Describe competitive advantage and the
competitive strategies organizations use to get it.
.
Strategic Management
Strategic management
what managers do to develop the organization’s
strategies
Strategies
he plans for how the
organization will do what it’s
in business to do, how it will
compete successfully, and
how it will attract and
satisfy its customers in order
to achieve its goals
Business model
how a company is going to
make money
Why is Strategic Management
Important?
Helps managers
decide how to act in
face of change and
uncertainty
Helps complex
and diverse
organizations
work together
Has a positive
impact on
performance
Strategic Management Process
Strategic Management Process
Mission:
the purpose of an
organization
Components of a
Mission Statement
Strategic Management Process
Opportunities: positive trends in the external environment
Threats: negative trends in the external environment
The “what” of the organization
Resources:
Capabilities:
Core competencies:
an organization’s assets
that are used to develop,
manufacture, and deliver
products to its customers
an organization’s skills and
abilities in doing the work
activities needed in its
business
the organization’s major valuecreating capabilities that
determine its competitive
weapons
Strategic Management Process
Strengths: any activities the organization does
well or its unique resources
Weaknesses: activities the organization does
not do well or resources it needs but does not
possess
SWOT analysis:
an analysis of the organization’s
strengths, weaknesses,
opportunities, and threats
SWOT Analysis
Combining Step 2 and Step 3
Internal Environment
Strength
any activities the organization
does well or any unique
resources that it has.
Weakness
activities the organization does
not execute well or needed
resources it does not possess.
SWOT
Opportunity
External factors that organization
can exploit
Threat
External factors that can affect
organization negatively
External Environment
9
Strategic Management Process
Competitive
Functional
Corporate
Types
Strategy:
A plan of action designed to achieve a long-term
or overall aim.
Strategic Management Process
No matter how effectively an
organization has planned its strategies,
performance will suffer if the strategies
aren’t implemented properly.
How effective have strategies been at helping
the organization achieve its goals?
What adjustments are necessary?
Examining the Different Types of
Strategy
Examining the Different Types of
TYPES
Strategy
Renewal
Growth
Corporate strategy:
an organizational strategy that
determines what businesses a
company is in or wants to be in, and
what it wants to do with those
businesses
Stability
Growth strategy:
A corporate strategy that’s used when an
organization wants to expand the number
of markets served or products offered,
either through its current business(es) or
through new business(es)
• Concentration
• Vertical integration
• Horizontal integration
• Diversification
Stability strategy:
A corporate strategy in which an
organization continues to do what it is
currently doing
Renewal strategy:
A corporate strategy designed
to address declining
performance
Managing Corporate Strategies
BCG matrix:
A strategy tool that guides resource allocation decisions on the basis of market
share and growth rate of SBUs
Cash flow
Desired
movement
Divest
Competitive Strategies
Competitivestrategy:
strategy:
Competitive
Anorganizational
organizationalstrategy
strategyfor
forhow
howan
anorganization
organizationwill
willcompete
competeininits
its
an
business(es)
business(es)
Corporation
Strategic
Business Unit
(SBU)
Halal Integrated Poultry
and Manufacturing
The Role of Competitive Advantage
Basis of advantage
(example from the industry)
Quality
Technology
Low Cost
Other Factors
Competitive advantage:
What sets an organization apart; its distinctive edge
Sustaining A Competitive Advantage
Businesses must not only develop a competitive advantage but they
must also sustain it.
Warren Buffett’s “Economic Moat” idea
Sustaining competitive advantage by protecting long-term
profits and market share using various means.
Sustaining A
Competitive
Advantage
Power of Suppliers
Examining power of suppliers
over businesses
Threats of New
Entrants
Examining barriers to entry
Current Rivalry
Examining the
competitiveness in
industry
Threats of Substitutes
Do buyers have other options?
Power pf Buyers
Examining power buyers over
businesses
Porter’s Five
Forces Model
Choosing Your Competitive Strategy
Cost
Leadership
Strategy
Differentiation
Strategy
Focus Strategy
Struck in the
Middle
Functional Strategies
Functional strategies:
A strategy used by an organization’s various functional departments
to support the competitive strategy
Some clothes with dual
functions – for home and
work
Competitive Strategy
Differentiation
Functional Fast Fashion
Production
Customer Service
Outsourcing to cheaper
nations
“Welcome to UNIQLO chant
R&D
Worked on new materials
with Toray Industry – Airism
(cool material) & Heatech
(warm material)
Working with fashion houses
and designers
Fashion items with short
life time
Sales & Marketing
Human Resources
Training on the UNIQLO way
– how to fold clothing, eye
contact with customer,
customer greeting
Important Strategies for Today's Businesses
E-Business
Strategies
First Mover
Customer
Service
Strategies
Innovative
Strategies
Mass
Customization
Social Media
and
Digitalization
First Mover - Advantages and
Disadvantages
Be the first
in market